LXD is something you can easily configure from cloud-init:

https://docs.cloud-init.io/en/latest/reference/modules.html#...

And then set up the subcontainers with their own cloud-init:

https://docs.cloud-init.io/en/latest/tutorial/lxd.html

So I am guessing this might appeal more broadly.

MicroCloud for example, it's been actively pitched for smaller sites by Canonical

Incus is the successor... Used it for years ... Supports docker images, container images (more like a container running a VM image) and vms

MicroCloud and some other product for sure